Good morning investors; I just wanted to thank you for reading this publication, and if you haven’t already, make sure to join 830 other readers to stay up to date on everything in the financial markets.

Today We’re Covering:

• Where the recession is already starting

• The Next FOMC

• & Much More!

📺 What To Watch Out For

1/ The Recession Is Already Starting

When you hear the word “recession,” it’s important to understand that it’s not just an event but a long, drawn-out process. While most people will feel the pain of a recession, some places will be hit harder than others.

The unemployment rate is one of the final lagging indicators of a recession.

Down below is a heatmap of where we are starting to see the first cracks appear in the US:

1/ Massachusetts

2/ New York

3/ California

4/ Oregon

Remember, a recession is a long, drawn-out process, not a single event. But we are seeing the final stages of this process unfold. First, individual states will go into recession; then, they will eventually drag the economy down.

2/ What Will The FED Do Next?

The next FOMC meeting is in 5 days, hours as of writing this, which is the next time the FED will meet to talk about interest rates.

There’s a 78% chance the FED pauses rate hikes in June.

However, there’s a 66% chance the FED continues raising rates in July.

Why does all this matter? Why should you care about what the FED does?

Investors briefly priced in a full quarter-point rate hike by the Fed by July, and though they still expect some easing by year-end, multiple rate cuts have been priced out of markets. That’s triggered a renewed flattening of sections of the US yield curve.

All of this signals longer and stronger pain for the US Economy, pushing us closer and closer to a harder recession.

🎥 Recession Signals

The markets have been extremely resilient over the past several months. I mean, the S&P 500 is only 10% off its all-time high as of writing this. That, however, will likely change as the days go on; it will be one of those events where nothing happens for a while, then everything at once.

📊 Chart of the Day

1/ This Indicator Has 100% Accuracy Over The Last +50 Years

Every time the ‘10 Year / 3 Month’ yield curve has inverted, it has predicted a recession EVERY TIME!

Since the 1980s, this has been the worst yield curve inversion yet.

🐦 Twitter Takeaways

The US Debt Problem Is Much Worse Than You Think

The Entire US Treasury Market Visualized

💭 Market Thoughts

The markets have been hanging on by just a thread; there’s really no reason in my mind that the markets should be doing this well.

We’ve got:

1/ S&P 500 being held up by ~5 mega stocks

2/ Crypto markets being obliterated by regulations within the US

3/ Mortgage rates continue to rise, as well as home prices

4/ Inflation seems to be sticking around longer than expected

5/ We had some of the largest bank failures in history, back to back to back!

All of this, and we still haven’t seen any significant recessionary impacts yet. I think the worst is still yet to come.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.